• Q1 earnings up 23% to US$1.18bn
  • Gross margin expands 90 bps to 47.5%
  • Sales climb 5% tp $8.41bn
Nike delivered “impressive” China sales growth

Nike delivered “impressive” China sales growth

Sportswear giant Nike has offered an optimistic outlook as it booked higher first-quarter earnings and strong sales gains in China.

Earnings were up 23% to US$1.18bn in the three months to the end of August, reflecting strong revenue growth, gross margin expansion, selling and administrative expense leverage, and a lower tax rate.

Gross margin expanded 90 basis points to 47.5%, primarily due to higher average selling prices and continued growth in the higher margin Direct to Consumer (DTC) business, partially offset by higher product input and warehousing costs.

Revenues grew 5% from a year earlier to $8.41bn, and excluding currency changes global sales were up 14%. China led all regions, with strong revenue gains of 30% to $886m.

FBR & Co analyst Susan Anderson noted the “impressive” China sales growth, driven by broad gains in sportswear, running, and basketball.

“Its market reset is bearing fruit, with strong DTC growth and repositioned wholesale doors driving expanded productivity/profitability. We see continued runway for wholesale improvement as only half of doors have been repositioned. Nike is mindful of potential macro pressure, but a slowdown is not yet apparent.”

Nike said futures orders, which reflect products scheduled for delivery in the next six months, rose 9% on global basis, and 17% on a currency-neutral basis. The figure is one watched by investors as a benchmark for product demand.

“Fiscal 2016 is off to a great start,” said Nike CEO Mark Parker. “Our relentless pace of growth is driven by our proven strategy of putting the consumer first, obsessing innovation in everything we do and leveraging our powerful portfolio. We’re well-positioned to continue to deliver long-term growth that is both sustainable and profitable.”